Limited company vs sole trader
|Limited Company||Sole Trader|
A corporate structure in which the shareholder(s) own the business and their responsibility for company debt is limited to the amount they have invested in the company.The company is run by a board of directors who act on behalf of the shareholders, although in most small businesses this may well be the same individual(s).
|A structure in which the business is owned by one person, acting under their own name or using a ‘trading name’. This person is fully liable for the companies debts and contracts and there is no distinction in law betweem the business and their own personal wealth.|
Three popular ways to set up a company are:
|Register with HM Revenue & Customs.|
|Limitation of Liability||
The debts are the responsibility of the company. The shareholders are only liable to the extent of the capital that they have in the company, unless the plaintiff can prove that the directors have been negligent or fraudulent.
|There is no legal distinction between business money and personal money for anyone self employed, which means that any debts of the business are the responsibility of the individual|
An Annual return must be filed with companies house (present cost £15 on-line filing)
|No annual return required|
|Accounts & Administration||
Limited company accounts have to be produced to comply with statutory regulations.
A company director is responsible for adhering to company administration according to statutory regulations in regard to both the limited company accounts, statutory books and management as stated in the articles of association. The duties of a director are more formal than a sole trader.
|Sole trader accounts can be quite simple as a formal accounting system is not required and can be reduced to simple lists of income and expenditure supported by documentary evidence .|
This document is illustrative only and does not constitute advice.
Mrs Judith Wilson
JAWs Accountancy Services Ltd
Phone: 01530 412658
Mobile: 07866 223059
Packington, Ashby De La Zouch
9.00 a.m. to 3.30 p.m.
Monday to Friday
JAWs Accountancy is an Accountancy practice based in Packington, Ashby-De-La-Zouch. We offer Accounting services to small businesses and companies in Ashby and surrounds.